(Yicai Global) July 3 -- Trina Solar’s shares tumbled after the Chinese solar equipment giant announced a CNY10.9 billion (USD1.5 billion) private placement and capacity expansion plan amid big fundraising activities and persistent oversupply worries in the industry.

Trina Solar [SHA: 688599] closed 8.6 percent lower at CNY38.95 (USD5.37) a share in Shanghai today. The Changzhou-based company’s stock is down 39 percent so far this year.

From the proceeds, CNY7.6 billion (USD1.1 billion) will be used to build three new solar cell or panel plants, with the rest going to supplement liquidity and repay bank loans, according to a July 1 private placement plan by the firm, which is also a major solar panel supplier in China.

It is the second major financing proposed by Trina Solar this year and the fourth since its initial public offering on Shanghai’s Nasdaq-like Star Market in June 2020. The company raised CNY16.6 billion through the first three.

Trina Solar and other photovoltaic firms did well last year. But since the start of the second half of 2022, the industry leaders have seen their share prices fall, overshadowed by concerns about overcapacity. In fact, Trina Solar’s stock has slumped about 56 percent since mid-August 2022.

Amid the decline, Trina Solar’s controlling shareholder Gao Jifan and persons acting in concert pared their holdings of the firm’s convertible bonds by about CNY1 billion (USD138 million) in the last week of February.

In addition, at the end of May, the company’s third-biggest shareholder Xingyin Growth Capital Management and its wholly-owned subsidiary said they would cut their combined stake by 5.65 percent over six months, after having trimmed their holding by about 2.4 percent since last November.

Under these circumstances, plans for new large-scale financing and capacity expansions are bound to shake investor confidence and cause stock prices to fall sharply, according to analysts.

Editor: Peter Thomas